According to the report in Reuters, a growing number of former homeowners are finding their way back onto the property ladder again, after having lost their previous homes to foreclosure or being forced to short sell.

Reuters revealed that the FHA is leading the way in helping foreclosure victims and short sellers to get back into real estate, providing special mortgages tailored to this group. In order for victims of foreclosure to borrow from the FHA, they have to stump up a down payment of at least 3.5%, and must have a credit rating of 620 or higher. These requirements are significantly lower than those associated with regular mortgage loans.

Greg McBride, an analyst with Bankrate.com, explained that the FHA-backed loans being taken up by former homeowners were “not mainstream programs geared for mainstream borrowers.”

But despite the availability of mortgages tailored for former homeowners, anyone with ambitions to re-enter the housing market will have to make a huge effort to boost their credit score, which will have been severely impacted by any foreclosure or short sale.

Frank Donnelly, president of the Washington DC Mortgage Bankers Association, said that loan options currently on the table for ex-homeowners were only available to those who had made huge strides in rebuilding their credit score.

“They have to prove to lenders that it was something like a job loss that caused this, and not chronic delinquency,” explained Donnelly.

Apparently, many lenders these days are ready to take into account the reasons why an applicant lost their previous home. According to Reuters, lenders are much more likely to take a chance on a borrower who tried but failed to keep their home (due to job loss or other unfortunate circumstances) than an applicant who chose to walk away even though they could still afford to make regular payments on their loan.